If The Answer Is "Treasury", Then Ask Another Question!

Ground Zero: It was the Treasury which planned, and in large measure led, the neoliberal revolution in New Zealand. In 1984, its official “briefing paper” to the incoming Labour Government – presented in book form and entitled Economic Management – became the Finance Minister’s, Roger Douglas’s, “Little Beige Book”. Step-by-step it led the new government down the most radical path of deregulation, privatisation and marketisation yet attempted in a western democracy. 

JACINDA ARDERN had the Director-General of Health, Dr Ashley Bloomfield, to stand alongside her in the Beehive Theatrette. Who should Grant Robertson stand alongside? The Finance Minister tells us he is talking with Treasury’s top people. Together, he assures us, they are charting a course out of the unfolding Covid-19 Recession. In effect, Robertson is inviting us to trust Treasury. If economics were a real science, like microbiology, then trusting Treasury would be a reasonable option. But economics isn’t a science. In fact, it’s not even close.

Treasury could send out it’s top person, Chief Executive and Secretary Caralee McLiesh, to stand alongside the Finance Minister, but unless she possesses presentation skills so far undisplayed in her short career at the top of New Zealand’s most powerful government department, it just wouldn’t be the same.

That’s because it was the Treasury which planned, and in large measure led, the neoliberal revolution in New Zealand. In 1984, its official “briefing paper” to the incoming Labour Government – presented in book form and entitled “Economic Management” – became the Finance Minister’s, Roger Douglas’s, “Little Beige Book”. Step-by-step it led the new government down the most radical path of deregulation, privatisation and marketisation yet attempted in a western democracy. Three years later, a second volume, ominously entitled “Government Management”, instructed Labour and National in how to finish the job.

Nothing released by the NZ Treasury in the last 36 years has indicated that it has deviated in any significant way from the ideological position it staked-out so boldly in the early 1980s. That no government elected in the last 36 years has felt confident enough to defy Treasury advice (at least, not in any meaningful way) merely confirms how enduring its ideological and organisational victories have been.

If the Finance Minister invites Ms McLiesh to stand at the other podium on the Beehive Theatrette stage it will tell us at least two things: 1) That the co-ordinates to economic recovery have been set using a neoliberal compass. 2) That the Finance Minister is happy to steer by Treasury’s stars.

New Zealanders are confident that the advice of their Director-General of Health, grounded solidly in medical science, is sound. We can trust Ashley. But, unless there’s been another revolution in the upper echelons of Treasury, its advice will continue to be grounded in the demonstrably unsound neoliberal ideology. That being the case, Caralee can be trusted to prescribe exactly the same medicine New Zealanders have been forced to swallow since 1984. Moreover, if Grant is standing there alongside her in the Beehive theatrette, nodding sombrely as she speaks, then he can be trusted absolutely to administer it.

It is only fair to acknowledge at this point that the Finance Minister isn’t exactly spoiled for choice when it comes to alternative ways out of the economic disaster inflicted upon us by the Covid-19 virus. So crushing were Treasury’s victories of the 1980s and 90s that until very recently the opponents of neoliberalism have lacked the intellectual confidence to advance anything approaching a credible alternative to the economic status quo.

Where, we may ask, is the comprehensive recovery plan submitted to the Finance Minister by the Council of Trade Unions? Where is the progressive equivalent of the plethora of books penned by the disciples of Milton Friedman and Friedrich Hayek in the 1970s and 80s? If the French economist/historian Thomas Piketty is supposed to be the twenty-first century’s answer to that great prophet of managed capitalism, John Maynard Keynes, then the Left has been sold a very soggy croissant.

Once again, being fair to Grant Robertson, it was Labour’s “Future of Work” exercise – over which he presided in the run-up to the 2017 General Election – that equipped the Finance Minister with such heterodox ideas as he has been willing to draw on in responding to the Covid-19 Crisis.

Rather than attempt to replicate the Prime-Minister’s highly effective daily briefings with Dr Bloomfield, perhaps it would be wiser for the Finance Minister to draw upon his Future of Work’s consultative precedent. Would it not constitute an “essential service” to New Zealand’s economic wellbeing to convene (with appropriate social-distancing) a conference embracing all the significant sectors of our society: bosses, workers, farmers, bankers, bureaucrats, professors, students, artists, beneficiaries, priests and non-profiteers; to collectively chart an equitable course to national recovery?

This essay was originally published in The Otago Daily Times and The Greymouth Star of Friday, 1 May 2020.

The Superannuation Crisis Nobody's Talking About.

Outdated Assumptions: None of the Right’s nostrums adequately address the devastating impact which the rising trend of young people renting, rather than owning, their dwelling-places is bound to have on the affordability of NZ Superannuation. The key assumption of the present system is that a very large proportion of New Zealanders aged 65-and-over will continue to enjoy freehold possession of their own home. NZ Super simply isn’t configured to provide an income large enough to cover not only the over-65’s basic living expenses, but their accommodation costs as well.

 

THE ACCEPTED WISDOM concerning NZ Superannuation is that it will become unsustainable if nothing is done to make it more affordable. I agree. But what the acceptably wise believe needs to be done, and what actually needs to be done, are two very different things.

 

There is no institution more acceptably wise than the New Zealand Treasury – and its prescription for NZ Super is harsh. Not only does it favour the age of eligibility being pushed out beyond 65, but it also wants that to happen a lot sooner than 2040.

 

And that’s by no means all. To rein-in the long-term cost of the scheme, Treasury also favours changing the way the quantum of NZ Super payments is calculated.

 

As is so often the case with Treasury, however, there is more to these gnomic prognostications than meets the eye.

 

In political-economic terms, Treasury is as dry as the Atacama Desert. As both the fountainhead and champion of neoliberalism in New Zealand, it operates according to a remorseless set of right-wing ideological assumptions. None of these are compatible with the principle of universal entitlement which lies at the heart of the NZ Superannuation scheme, as presently configured.

 

Indeed, Treasury’s recommendations have very little to do with NZ Superannuation, per se. Rather, they are based on what it considers to be an “acceptable” level of long-term government debt. This it has set at 20 percent of GDP.

 

Possible policy pathways to this ideologically arrived-at figure include: quietly enhancing the revenue-gathering effects of fiscal drag; increasing the rate of GST; and significantly reducing government spending on health.

 

It’s easy to see why the Prime Minister chose the option of “reforming” superannuation!

 

Equally easy to see is Bill English’s determination to lead an “Austerity Government”. Reducing long-tern Crown indebtedness to 20 percent of GDP is simply not achievable without savage cuts in public spending.

 

The biggest public spenders, by far: NZ Superannuation, Social Welfare, Health and Education; will be the first to feel English’s austerity lash. If the National-led Government is returned for a fourth term, then New Zealanders should brace themselves for the same sort of harrowing headlines currently besetting the UK and Europe.

 

None of the Right’s nostrums, however, adequately address the devastating impact which the rising trend of young people renting, rather than owning, their dwelling-places is bound to have on the affordability of NZ Superannuation.

 

The key assumption of the present scheme’s defenders is that a very large proportion of New Zealanders aged 65-and-over will continue to enjoy freehold possession of their own home. NZ Super simply isn’t configured to provide an income large enough to cover not only the over-65’s basic living expenses, but their accommodation costs as well.

 

Those Generation Xers who airily opine that “superannuation probably won’t be there for me”, really need to think this through. Are they truly that confident of their ability to save a capital sum large enough to carry them through their old age unaided by the state? And if not, how do they see themselves surviving on a pension currently set at a figure well below their weekly accommodation costs?

 

A Treasury less obsessed with leading us further into the arid wilderness of free market economics would already be grappling with this looming social disaster. A government genuinely concerned with the future welfare of its younger citizens would be demanding answers – right here, right now.

 

Politicians of the Left, in particular, should be looking at the interlinkages between housing unaffordability and the increasingly insupportable burden NZ Super is predicted to become in 30-40 years’ time.

 

This is not a Baby Boomer crisis: it is a crisis which, if a radical revision of New Zealand’s entire system of economic management is not undertaken more-or-less immediately, is going to engulf the Boomers’ children and grandchildren.

 

The re-design of our welfare state must begin now. Not on the basis of meeting the arbitrarily determined targets of ideologically-driven fanatics, but on the basis of meeting the measurable and predictable needs of the entire population. Everything must be thrown into the mix: taxation policy; housing policy; health policy, education policy and, most importantly, how to guarantee a living income to young and old alike.

 

The alternative to systemic change is systemic collapse. With old age becoming, once again, a looming spectre of misery, loneliness and despair.

 

This essay was originally published in The Waikato Times, The Taranaki Daily News, The Timaru Herald, The Otago Daily Times and The Greymouth Star of Friday, 10 March 2017.

Are The Greens Arriving From, Or Departing For, Another Planet?

Little Green Men: Coming Or Going? Green Co-Leader, Metira Turei's State of the Nation speech made it very clear that her party has grown very weary of living on Planet Impotence - and may even be contemplating a departure for Planet Key. Her plans for Treasury to audit political parties' manifestos would certainly make the Greens' stay on Planet Key more comfortable.

 

I’M WORRIED that the oft-repeated claim that the Greens come from another planet, might, in fact, be true. Because only someone recently arrived from an altogether more benign solar system could possibly argue that the NZ Treasury casting its cold forensic eye over left-wing parties’ policies is a good idea. The astonishing naivety of the suggestion confirms every old socialist’s slur that when you’re dealing with the Greens, you’re dealing with the children of a very different tribe. And, honestly, after Metira Turei’s “State of the Nation” speech, I’m minded to amend the end of that sentence to read: “a very different and a very stupid tribe.”

 

According to Ms Turei: “New Zealanders deserve more transparency from their politicians so that they can better engage in the political system. That’s why the Green Party is proposing the establishment of [a Policy Costing Unit] to provide independent costings for the policies proposed by political parties. The PCU would be an independent unit within the Treasury and available to all parliamentary parties. It would help cut through the noise of political party promises and deliver New Zealanders unbiased information.”

 

Unbiased information! Clearly, the inhabitants of the planet Ms Turei has been visiting for the past 32 years are entirely ignorant of the 1984 neoliberal coup-d’état spearheaded by the leaders of the New Zealand Treasury. How else are we to explain her child-like faith in the Treasury’s lack of bias? Any other politically aware individual from this benighted chunk of our planet would have not the slightest difficulty in identifying No. 1 the Terrace, Wellington, as New Zealand’s Barad-dûr – dwelling place of the Dark Lord and source of all the woes of Middle Earth.

 

Can it really be true that Ms Turei has never heard of “Economics II”, the special Treasury division headed by the late Roger Kerr (of Business Roundtable fame) which, working alongside Dr Bryce Wilkinson and Dr Graham Scott of “Economics I”, was responsible for bringing together “Economic Management” – the policy bible for what came to be known as “Rogernomics”? Does she really not know that the current institutional “culture” of Treasury descends directly from these implacable ideologues?

 

Obviously not. Otherwise she wouldn’t dream of advocating that her party entrust its policies to Treasury’s tender mercies. Any more than she’d happily dispatch her youngest child for a sleepover at Michael Jackson’s Neverland!

 

And yet, Ms Turei was here, in New Zealand, for the entire time Treasury’s neoliberal evangelists were transforming the country. She knows full well that before 1984 the number of children living below the poverty line was 15 percent, and that after 20 years of Treasury-guided economic “reforms”, that figure had nearly doubled.

 

So, if eradicating child poverty is one of the Greens’ most important “twenty-first century policies” (as she told us, on the radio, only this week) then how is she going to feel when Treasury solemnly vouchsafes to the electorate that the measures her party proposes are not only unlikely to reduce child poverty but may even make it worse. And if she refuses to believe that Treasury would stoop to such blatantly political tactics, then all I can recommend is that she spend an hour or two with Sir Michael Cullen. As Labour’s finance minister from 1999 until 2008, he became something of an aficionado of Treasury’s “ideological burps”.

 

There is, of course, another explanation for Ms Turei’s extraordinary suggestion. It involves the Greens not arriving from, but departing for, another planet. Planet Key.

 

After all, the planet they’re currently living on – Planet Impotence – is a very dreary place. Nothing ever happens on this dismal chunk of rock, and what makes their lives even more frustrating is that Planet Key looks like a place where the right sort of Green could have such a lot of fun! It’s so bright, so blue, and everyone living there looks so happy. A material girl soon grows tired of hanging out with the poor and needy. Surely, it must be someone else’s turn to nursemaid the Labour Party! Especially when, every time Labour manages to construct a spaceship capable of lifting them off Planet Impotence, they always leave the Greens behind!

 

And that’s the beauty of establishing a PCU! It more-or-less guarantees that the Green Party’s Treasury-vetted policies will be ideologically indistinguishable from those of a National Government.

 

This essay was originally published in The Waikato Times, The Taranaki Daily News, The Timaru Herald, The Otago Daily Times, The Greymouth Star of Friday, 29 January 2016.

Little Big Man: Who Is Dr Bryce Wilkinson - And Why Should We Care?

Bryce Who? Small and unprepossessing, smiling his grandfatherly smile, Dr Bryce Wilkinson would be passed, unrecognised, in the street by 999 out of 1,000 New Zealanders. And yet, unelected, and largely unknown outside the neoliberal elite, this little man has left a very big impression on our country.

 

DR BRYCE WILKINSON can make a reasonable claim to have written the book that launched neoliberalism in New Zealand. The name of that book was Economic Management, and although its official author was the New Zealand Treasury, most historians agree that the book’s guiding intellect was Dr Wilkinson’s.

 

Economic Management knitted together, into what amounted to a detailed manifesto, a raft of radical economic measures that had been worked out in “Economics II” – described by Te Ara, The Encyclopaedia of New Zealand, as: “a think tank in the Treasury in the late 1970s and early 1980s.”

 

Economics II was staffed by young economists who had studied at universities in the United States where the monetarist theories of Milton Friedman, and the ideas of neo-classical economics generally, were already well-entrenched. Along with Dr Wilkinson, Treasury’s “think tank” included Graeme Scott, Rod Deane and Roger Kerr – individuals who would go on to play pivotal roles in the execution and consolidation of the neoliberal order in New Zealand.

 

When the Labour Party was swept into office at the snap election of 1984, Economic Management was waiting for them.

 

“But, wait a minute!”, I hear you object, “Since when does Treasury supply New Zealand’s political parties with ready-made manifestoes? Didn’t Labour have a manifesto of its own in 1984?” Indeed it did – but not the sort of manifesto in which anyone could place much confidence.

 

Though the public were not told, Labour’s manifesto was a hastily-cobbled-together mish-mash of the policies advocated by Labour’s left-wing dominated Policy Council, and the ideas emanating from the faction in Labour’s caucus led by Roger Douglas and his fellow “reformers” Michael Bassett, Richard Prebble, Mike Moore and David Caygill.

 

So extreme were the ideas of Douglas’s faction, and so hostile to Labour’s traditions, that a new faction was summoned into existence to fight them. By May of 1984, this latter group was circulating a document posing a radical left-wing alternative to the right-wing measures being fed directly to Douglas and his followers by their special Treasury adviser, Doug Anthony.

 

Had the Prime Minister, Sir Robert Muldoon, fearing a loss of his parliamentary majority, not called an early election on the night of 14 June 1984, it is fascinating to speculate as to which of these two, diametrically opposed, factions would have triumphed. An election held at the usual time, in November 1984, would have given Labour four more months (and an annual conference) to decide its future direction. Denied that time, the contending factions were persuaded to let David Lange’s deputy, the former Law Professor, Geoffrey Palmer, compose a manifesto both sides could live with, but which, as a reliable guide to the party’s future conduct in government, was next to useless.

 

Labour’s Bastille Day victory ceded the political initiative to Douglas’s faction. That the country was said by the Reserve Bank and Treasury to be in the grip of a “financial crisis” contributed hugely to the Right’s ability to control the course of events. Precipitated by a policy paper outlining Douglas’s determination to devalue the NZ dollar by 20 percent (which somehow ended up in the hands of the news media), the “financial crisis”, and the new government’s decisive handling of it, brought the Left/Right policy debate to an abrupt (if only temporary) end. It would be Dr Wilkinson’s Economic Management which set the course for what would later be called “Rogernomics”.

 

Readers of Bowalley Road born after those heady days in 1984, and thus played no part in the great struggle for Labour’s heart and soul that raged from July 1984 until the ejection of Mike Moore from – and the elevation of Helen Clark to – the leadership of the Labour Party in 1993, have been supplied with this brief sketch of the role Dr Wilkinson has played in New Zealand’s recent history, so that they can put his statement on foreign investment and racism, released earlier today (17/8/15) into some kind of context.

 

Commenting on the KPMG report showing China to be only the second-largest foreign investor (after Canada) in New Zealand (excluding residential property) Dr Wilkinson is reported as saying that “the report tackled many New Zealanders’ fears that China was buying up land, farms and businesses.” Anxiety about China was producing a “silly defensiveness” he said, adding that “racist attitudes and red tape were making New Zealand one of the most restrictive regimes in the world”. According to Dr Wilkinson: “We should be much freer and more open to the rest of the world and that helps New Zealanders get a better price for their assets which means they can invest more in the rest of the world themselves.”

 

More free and open! Such is the prescription of the man who, along with his colleagues from Economics II, persuaded the fourth Labour government to transform New Zealand into the most “free” and “open” economy on Earth. The man who urged on the sale of public assets to “foreign investors”, who were then free to repatriate the billions of dollars of profits extracted from them to their new owners offshore. The man who now calls those attempting to keep what remains of New Zealand’s assets out of foreign hands “racist”, but whose policy of preparing state-owned entities for privatisation saw tens-of-thousands of Maori forestry workers, railway workers and construction workers thrown out of their state jobs – leading to the disintegration of whole communities and the fracturing of whanau.

 

Small and unprepossessing, smiling his grandfatherly smile in the group photos of the New Zealand Initiative (successor to the now defunct Business Roundtable, which for many years was run by another alumnus from Economics II, Roger Kerr) Dr Wilkinson would be passed, unrecognised, in the street by 999 out of 1,000 New Zealanders. And yet, unelected, and largely unknown outside the neoliberal elite, this little man has left a very big impression on our country.

 

I’ll leave it for you, the reader, to decide whether it has been for good or ill.

 

This essay was originally posted on The Daily Blog of Monday, 17 August 2015.

Old Battles - Fought Unequivocally

Let's Do The Time Warp Again! Labour has been accused of "re-fighting too many old battles", but history suggests that it is precisely this willingness to stoutly defend traditional political values that explains the phenomenal success of politicians like Margaret Thatcher and Ronald Reagan. It is equivocation that turns voters off - not conviction. So, come on Labour: "It's just a jump to the Left!" 

IN A RECENT COLUMN the veteran political correspondent, John Armstrong, accuses the Labour Party of “fighting too many old battles”. The perennial socialist causes, for which Labour’s politicians should still feel duty-bound to draw their swords, declares Armstrong, “have long been lost or are no longer relevant to most voter’s daily existence”.

 

By way of example, Armstrong draws attention to Labour finance spokesperson, David Parker’s, snappish criticism of Treasury’s “Investment Statement”.

 

This latter document, released nearly a fortnight ago, was responsible for raising considerably more than Parker’s eyebrows by suggesting that public ownership of health and education services, “should not be seen as the default setting”.

 

Labour’s finance spokesperson was having none of it and came out swinging. The Department, he said was “out of touch” with New Zealanders and accused it of promoting privately-owned “McSchools” and “McHospitals” instead of publicly-owned (and, therefore, accountable) education and health facilities.

 

“I can be completely clear”, thundered Parker, “Labour rejects that philosophy. Public ownership of public schools and public hospitals is essential to provide opportunity and protection for all New Zealanders. This is what people pay their taxes for.”

 

Borrowing a line from his predecessor in the finance role, Dr Michael Cullen, he characterised the Treasury’s highly contentious statement as yet another example of its unnerving predilection for unleashing random “ideological burps”.

 

Parker concluded his media release by challenging the Prime Minister and Finance Minister to combat Treasury’s rebarbative ideological offerings with the same antacid remedy as Dr Cullen.

 

That neither John key nor Bill English accepted Parker’s challenge, Armstrong argued, is attributable to the National Party’s belief that Labour is trapped in an “ideological time-warp”. The clear implication being that when it comes to the traditional Left/Right squabbles over Private versus Public ownership – the average voter no longer cares.

 

Armstrong’s concluding paragraph is bleak:

 

“National argues that if Labour could not prompt a voter backlash against the partial floats of the remaining state-owned electricity generators, it will struggle to stop the growing trend for private provision worldwide. The genie is well and truly out of the bottle. Labour has little hope of stuffing it back in.”

 

That the Right struggled very successfully to stop the growing trend toward public provision worldwide, and found it surprisingly simple to stuff the socialist genie responsible back in his bottle, seems to have escaped Armstrong.

 

And if he were to recall that, in New Zealand, the whole privatisation process was initiated by Labour, then the public’s unwillingness to be convinced by their re-conversion to the virtues of public ownership might look less like indifference and more like once-bitten-twice-shy caution. And who can blame them – given Labour’s repeated refusal to commit unequivocally to the repurchase of the privatised shareholdings?

 

Parker’s stout defence of public health and education speaks eloquently of Labour’s determination not to be caught equivocating on the last remaining bastions of collectivism in New Zealand society. Were the Right to be successful in privatising our schools and hospitals (and finally taming the education- and health-sector unions) there would be little left for Labour to defend.

 

The key strategic question Labour has yet to answer, however, is: when will it finally make the transition from defence to offence?

 

When the Right finally realised (in the mid-1970s) that the last great bastions of private enterprise – those the British Labour firebrand, Tony Benn, described as the “commanding heights of the economy” – were about to come under full-scale assault by the forces of the Left, its more far-sighted and aggressive advocates realised that defensive tactics were losing them the battle. Tory hardliners like Sir Keith Joseph, Airey Neave and Margaret Thatcher didn’t bleat on about it being too late to stuff the socialist genie back in its bottle – they made stuffing the socialists their No. 1 priority.

 

The greatest enemy any ideology – Left or Right – will ever face is not indifference but equivocation. The achievements of the Liberal Government of 1890-1912 and of successive Labour Governments up to 1984 were not laid low for want of voters willing to defend them, but by politicians unwilling to re-state – unequivocally – the reasons why socialists must never for a moment cease “re-fighting old battles”.

 

Margaret Thatcher always referred to her country as “Great” Britain, because reclaiming Britain’s greatness was her whole manifesto.

 

What will Mr Cunliffe ride forth to battle to re-claim?

 

This essay was originally published in The Waikato Times, The Taranaki Daily News, The Timaru Herald, The Otago Daily Times and The Greymouth Star of Friday, 4 April 2014.

It Was A Fair Cop, Hekia, And Treasury's To Blame

Suck It Up, Minister: Education Minister, Hekia Parata, was forced to reverse her government's own policy on class sizes in the face of massive public opposition. Had she possessed sufficient critical intelligence to challenge the policy's prime promoter, Treasury Secretary, Gabriel Makhlouf, she could have saved herself - and her government - a very large serving of very dead rat.

IN THE END, it all comes back to Treasury. Education Minister, Hekia Parata, like so many politicians before her, has taken the advice of Treasury’s ideologues, and paid the price. This willingness of right- and left-wing politicians to drag their careers over a cliff, by following the lead of an agency which has consistently failed to tender either reliable or useful advice to government, bears testimony to ideology’s uncanny knack for over-riding the urgings of electoral common sense.

The debacle over class sizes may be traced back to Treasury’s advice to the incoming Minister of Education following the 2011 General Election. Faced with an intensifying fiscal crisis, Treasury Secretary, Gabriel Makhlouf, saw an opportunity to attend to Treasury’s unfinished business with this country’s disconcertingly independent educationalists.

The proudly professional culture of New Zealand’s highly regarded education system (we rank sixth out of thirty-four OECD countries) continues to stand athwart Treasury’s relentless ideological advance.

It thus constitutes a standing rebuke to Treasury’s otherwise unassailable neoliberal mandarinate. Its collegial values and altruistic purposes sit most uncomfortably within the neoliberals’ highly individualistic and competitive reading of human nature. While achieving a large measure of success in the universities (attributable mostly to New Zealand academics’ timidity and lack of solidarity) Treasury’s neoliberal policies have been staunchly and successfully resisted in New Zealand’s primary and secondary schools. This is due, almost entirely, to the strength of New Zealand’s two main teacher unions – the NZEI and the PPTA.

Before New Zealand’s teaching profession can finally be “neoliberalised”, it will first be necessary to break these teacher unions. There are two ways of doing this. The first, and most brutal, is to do what Scott Walker, Governor of the US state of Wisconsin, did: pass legislation stripping state employees of their right to collective bargaining. The second, and much more effective, way to break a union is to undermine its members’ solidarity: to divide and conquer.

The classic method of decollectivising a workforce is the introduction of performance pay. Once workers’ remuneration ceases to be reckoned by the job to be done, and is set, instead, by the boss’s perception of how well each individual worker is doing the job, the ability of the workforce to maintain collective cohesion and purpose rapidly falls away.

New Zealand has, of course, already attempted a legislative “final solution” to the union problem. But, although the Employment Contracts Act (1991) proved highly successful at breaking the power of private sector unions; public employees – especially teachers – by sticking together and fighting back, have resisted every attempt to set one colleague against another, undermine the union, and hand the education sector over to Treasury (and its political handmaidens) for neoliberal “re-education”.

It is, therefore, very difficult not to read the Treasury Secretary’s advocacy for trading-off a few extra pupils in every class-room for a lift in the quality of the country’s teachers, as a way of admitting performance pay (and undermining the teacher unions) by the back door.

Prime Mover: The author of the "class-size-increase-for-improved-teacher-quality" trade-off, Treasury Secretary, Gabriel Makhlouf.

Citing the highly contestable figure of “one in three” school-leavers entering the New Zealand workforce as an educational failure, Mr Makhlouf argued strongly, and very publicly, that this scandalous “output” of the system could only be rectified by encouraging better teaching. By this he did not mean that we should embrace the Finnish policy of keeping a very high teacher-student ratio while, at the same time, ensuring that teaching remains one of that country’s best qualified and well-paid professions. No, what Mr Makhlouf wanted was an opportunity to pit teachers against one another in a quest to find “the best” teachers, and then, presumably, offer them individual employment contracts and higher pay. This competitive model would also have identified “the worst” teachers, allowing them to be purged from the system. School staff-rooms would thus become battle-grounds where “winners” prospered and “losers” lost their jobs. Collegial values, ill-adapted to Treasury’s new “survival of the fittest” environment, would be driven to extinction – followed closely by the teacher unions.

The triumph of the competitive market model within the teaching profession would, inevitably, see its operating principles installed in every class-room. The transmission of skills and knowledge, the system’s outputs, would be subjected to detailed empirical measurement. Every pupil would be “tested”, and every school’s resourcing determined by the results of those tests. New Zealand’s internationally admired education system would very quickly join the derelict systems of the United States and the United Kingdom.

Was Ms Parata really seeking this disintegration of New Zealand’s education system? Of course not! Why, then, couldn’t she decode Mr Makhlouf’s policy prescription? The answer is simple: to decipher neoliberal ideology one needs to adopt a critical perspective; and that presupposes ideological agnosticism.

Had Ms Parata felt equal to challenging Treasury’s ideologically-driven recommendations, she’d never have been required to undertake her embarrassing political “reversal”.

This essay was originally published in The Press of Tuesday, 6 June 2012.